Analysis of the Prevention and Control of Inner lake Pollution in China Based on the Game Between the Government and Enterprises

Abstract

With the rapid development of industrialization, the pollution problem of Inner lakes have become increasingly prominent. Enterprises do not consider environmental costs to pursue profit maximization, and government regulation becomes inevitable. The pollution control process of Inner Lake is actually a game process between enterprises and the government. In the current game analysis, there is a major defect of ignoring the political cost and reputation cost caused by environmental pollution to the government and enterprises, which makes the theory unable to explain the real world. This paper analyzes the static game and mixed strategy game between local government and enterprises, and draws the conclusion that the extra benefit, reputation cost, government supervision cost and political cost of enterprises' pollution of Inner lake all affect the choice of their behaviors. In addition, this paper introduces discount factor, analyzes multi-stage dynamic repeated game, and finds that the enterprise's future choice is closely related to the size of discount factor. Finally, the author puts forward policy Suggestions to promote and improve their behaviors from three aspects. Firstly, the third party constraint mechanism is introduced to increase the political cost of the government and the cost of corporate reputation. Secondly, actively carry out technological innovation to reduce the cost of pollution treatment. Finally, it is necessary to increase the punishment for negligence of government supervision and strengthen the responsibility of government supervision.